Elizabeth Holmes, the founder and CEO of the Silicon Valley start-up Theranos which eventually failed, was given a sentence of more than 11 years in prison on Friday. She was convicted in January for cheating investors while running the blood testing start up Theranos.
Elizabeth had been successfully securing funding from investors. However, her lies and cheating was later discovered regarding the technology and business transactions of her company.
Judge Edward Davila imposed a sentence of 11 years and three months in prison. She also imposed a condition, wherein, Holmes would be under supervision for three years after she is released. Holmes’ sentence also includes a fine of $400, or $100 for each count of fraud. A compensation amount will also be set, but at a later date.
Holmes was ordered to turn herself into custody on April 27, 2023. She is believed to appeal her conviction.
The government lawyers had asked for a 15-year prison term, as well as probation and restitution, while Holmes’ probation officer urged for a nine-year term. Holmes’ defence team asked judge Davila, who presided over her case, to give her to up to 18 months of confinement after which she should be given probation and community service.
Before the judge gave her final verdict, sentencing Elizabeth Holmes became tearful while speaking to the court in San Jose, California, She said, “I loved Theranos. It was my life’s work. The people I tried to get involved with Theranos were the people I loved and respected the most. I am devastated by my failings.”
While apologizing to the employees, investors and patients of Theranos, she said, “I’m so, so sorry. I gave everything I had to build our company and to save our company,” she said. “I regret my failings with every cell in my body.”
George Demos, a former SEC enforcement attorney and adjunct law professor at UC Davis said, “The judge imposed a powerful sentence that confirms that fraud cannot masquerade as innovation in Silicon Valley. When given the opportunity to speak, Elizabeth Holmes made a statement that she takes responsibility for Theranos but did not say she takes responsibility for the fraud.”
One of Holmes’ lawyers, Kevin Downey, argued before the judge on her sentence. He said that Holmes’ case is different from other corporate fraudsters as she did not splurge like them on “yachts and planes.” Instead, the money was “used to build medical technology.”
However, Federal prosecutor Jeffrey Schenk highlighted such factors as fame, admiration, and a lifestyle that Holmes gained from her frauds,even if she could not gain financially.
Friday’s sentencing hearing marks Holmes’ stark downfall. She achieved fame as an icon in the tech industry after her company promised treatment for a range of conditions with just a few drops of blood. But now she has become that unique tech founder to be convicted and face prison for her company’s misdeeds.
38 year old Holmes started Theranos in 2003 at the age of 19 and quickly thereafter quit her studies at the Stanford University to run the company full-time. She was under the radar for a decade. Afterwards, Holmes began courting the press with claims that Theranos had invented technology that could accurately and reliably test for a range of conditions using just a few drops of blood taken from a finger prick.
A who’s who of wealthy backers, including Walmart’s Walton family, media tycoon Rupert Murdoch, Oracle founder Larry Ellison, and the billionaire family of former education secretary Betsy DeVos, helped Theranos raise $945 million. Theranos was valued at $9 billion at its height, making Holmes a phoney billionaire. She frequently wore a distinctive black turtleneck that drew analogies to the late Apple CEO Steve Jobs and was praised on magazine covers. (She hasn’t appeared in court with that expression.) A who’s who of wealthy backers, including Walmart’s Walton family, media tycoon Rupert Murdoch, Oracle founder Larry Ellison, and the billionaire family of former education secretary Betsy DeVos, helped Theranos raise $945 million. Theranos was valued at $9 billion at its height, making Holmes a phoney billionaire.
She frequently wore a distinctive black turtleneck that drew analogies to the late Apple CEO Steve Jobs and was praised on magazine covers.